The invention discloses a device and method for precisely measuring a laser line width on the basis of cyclic self-heterodyne interferometry. The device comprises a narrow line width laser which is successively connected with an isolator, a first Y-type coupler, a first frequency shifter, a second Y-type coupler, a photoelectric detector, and a frequency spectrograph via fibers. An X-type coupler is connected between the first Y-type coupler and the second Y-type coupler via fibers. The X-type coupler is successively connected with an attenuator, a second frequency shifter, an erbium-doped fiber amplifier, a fiber band-pass filter, a polarization maintainer via fibers so that a closed loop is formed. The device and the method uses cyclic self-heterodyne interferometry based on loss compensation, and a short fiber delay line, does not require complex theoretical simulation and accurate system parameter setting, and may measure laser linewidths at a sub-kHz magnitude accurately.